The Introduction of Academy Schools to England s Education

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1 DISCUSSION PAPER SERIES IZA DP No The Introduction of Academy Schools to England s Education Andrew Eyles Stephen Machin August 2015 Forschungsinstitut zur Zukunft der Arbeit Institute for the Study of Labor

2 The Introduction of Academy Schools to England s Education Andrew Eyles CEP, London School of Economics Stephen Machin University College London, CEP (LSE) and IZA Discussion Paper No August 2015 IZA P.O. Box Bonn Germany Phone: Fax: Any opinions expressed here are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but the institute itself takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.

3 IZA Discussion Paper No August 2015 ABSTRACT The Introduction of Academy Schools to England s Education * We study the origins of what has become one of the most radical and encompassing programmes of school reform seen in the recent past amongst advanced countries the introduction of academy schools to English secondary education. Academies are state schools that are allowed to run in an autonomous manner which is free from local authority control. Almost all academies are conversions from already existent state schools and so are school takeovers that enable more autonomy. Our analysis shows that this first round of academy conversions that took place in the 2000s generated significant improvements in the quality of pupil intake and in pupil performance. There is evidence of heterogeneity as improvements only occur for schools experiencing the largest increase in their school autonomy relative to their predecessor state. Analysis of mechanisms points to changes in headteachers and management structure as key factors underpinning these improvements in pupil outcomes. JEL Classification: I20, I21, I28 Keywords: academies, pupil intake, pupil performance Corresponding author: Stephen Machin Department of Economics University College London 30 Gordon Street London WC1H 0AX United Kingdom * This is a very substantively revised and overhauled version of a paper based only on school-level data previously circulated as Changing School Autonomy: Academy Schools and Their Introduction to England s Education (Machin and Vernoit, 2011). It should be viewed as the current version of that paper. We would like to thank the Department for Education for providing access to the pupil-level data we analyse and participants in a large number of seminars and conferences for helpful comments and suggestions.

4 1. Introduction The introduction of academy schools to English education is turning out to be one of the most radical and encompassing programmes of school reform seen in the recent past amongst advanced countries. Unlike traditional community schools which are run by local authorities, academies are autonomous, state-funded schools that are managed and run outside the control of local authorities. In almost all cases, they are conversions of already existing predecessor schools and so they inherit pupils already enrolled in the school. They are school takeovers which, because of their nature, enable more autonomy in operation than in their predecessor state. 1 At the time of writing, nearly 2000 of England's secondary schools (or about 63 percent of schools) and a further 2300 (about 15 percent) of primary schools had become academies. 2 The vast majority became academies after a change of government in May 2010 quickly ushered in the 2010 Academies Act, a legislative change that widened the academies remit. 3 School reforms that have taken place in many countries in the recent past notably free schools in Sweden, and charter schools in the US - have proven to be an important dimension of the changing education landscape. Change has occurred in the context of some reforming nations being innovative in their attempts to get closer to what they perceive to be the optimal 1 They are different from most US charter schools which are typically, though not always, set up from scratch. A closer comparison to the typical charter school in England is the free schools which are a recent addition to the education landscape and are new schools (often set up by parent or community groups). The closer US comparison to academies is in-district charters where an already existent public school is converted to a charter as a school takeover these are less commonplace than US charters as a whole, but there are places where conversions of public schools to charters have taken place (like Boston and New Orleans see Abdulkadiroglu et al., 2014). 2 In England, secondary schooling takes place from ages and primary schooling from ages Prior to the Act only secondary schools could become academies and to convert they were required to sign up a sponsor. Afterwards, primary schools were permitted to become academies, free schools were introduced and a sponsor was no longer required for conversion to take place. See Eyles, Hupkau and Machin (2015) for more details. 1

5 school type. At the same time in other countries education policies have been pursued with little deviation from the orthodox model of the traditional local or community school. 4 The genesis of the English academies programme is what we study in this paper. The academy school model was initiated under the Labour government when strong concerns were being expressed that schools in particular local authorities (usually serving urban inner-city disadvantaged neighbourhoods) were not delivering a good enough education to the children attending them. A widespread recognition emerged that something needed to be done, both to try to improve educational standards, and to confront significant behavioural problems, in these schools where it had been said that teachers had lost control of the corridors. The proposed solution was to replace an existing school with a new type of state school to be run outside of local authority control and which was managed by a private team of independent cosponsors. The sponsors of the new academy school delegate the management of the school to a largely self-appointed board of governors who have responsibility for employing all academy staff, agreeing levels of pay and conditions of service and deciding on the policies for staffing structure, career development, discipline and performance management. We study the causal impact of academy school conversion on pupil intake and pupil performance. This line of enquiry is aimed at working out how the Labour academy programme functioned and impacted on pupils affected by the policy. To do so we consider data on pupils in schools over the school years 2000/01 to 2008/09 since this facilitates a before/after analysis of the impact of academy conversion. 5 Of course, as the discussion has already made clear, it was pupils in disadvantaged schools that participated in academy conversion and so we need to 4 This is nowhere better illustrated in the cross-country differences highlighted in discussions of what kinds of schools do better or worse in the international test score data that has been a key resource in recent economics of education research (see OECD, 2011, or Hanushek and Woessmann, 2011). 5 The school year in England runs from September through July. 2

6 define a credible control group of pupils attending schools that did not become academies in the sample period. We do so by comparing outcomes of interest for children enrolled in academy schools to pupils enrolled in a specific group of comparison schools, namely those state schools that go on to become academies after our sample period ends. We discuss the rationale for the empirical credibility of this and our methods in using this research design (together with threats to convincingly achieving identification) in more depth below. It turns out that this approach produces a well-balanced treatment and control group that differences out key observable and unobservable factors linked to conversion to academy status. Because pupil composition may change before and after conversion to an academy, robust study of the causal impact of academy conversion on pupil performance needs to utilise an empirical strategy that is not contaminated by such change. The approach taken in this paper is to study performance effects for pupils who were already enrolled in the school prior to conversion and are then affected by academy conversion in subsequent years of their secondary schooling. Since the initial enrolment decision was made for the pre-conversion school, academy conversion should be exogenous to these students, and can be set up as in terms of an intention to treat empirical exercise, from which we can obtain a causal estimate of a local average treatment effect. In this setting, the intention to treat group is all pupils enrolled in the predecessor school who, irrespective of whether they actually do, are pre-conversion in line to take their year 11 KS4 exams in the school. The approach has similarities to that taken in Abdulkadiroglu et al. (2014), who study school takeovers in New Orleans, referring to pupils who stay in a converting school as grand-fathered pupils. Whilst we study a school transformation programme that is different in a number of dimensions to those that have been implemented elsewhere in the world, our work fits well with 3

7 two strands of economics of education research. The first is a growing literature that presents empirical estimates of the impact of school types on pupil achievement. For example, US work on charter schools tends to find achievement gains associated with charter status, and with the injection of charter school features to public schools. 6 In the UK, a small body of work has identified the impact of specific school types on educational and labour market outcomes. 7 The second is a bigger and by now fairly long established literature on school types in the US and elsewhere. These include many studies on Catholic schools, on voucher-subsidised private schools and many analyses of the impact of school types using international test score data. 8 In the next section, we discuss the structure of the secondary schooling system in England and document the rise of academies in the period we study. We also present a brief summary of related studies. Section 3 describes the data and the research designs we implement. Section 4 presents the main results on the effects of academy conversion on pupil intake and performance. We also report a number of robustness tests of our key findings. Section 5 hones in on mechanisms through studying the use of academy freedoms that underpin the reported results. We then offer conclusions to the paper in section 6. 6 This literature is not without its own controversy. Recent, typically small scale, experimental evaluations of charters in or near particular US cities (Boston and New York) find positive impacts on educational achievement (see Abdulkadiroglu et al. 2011, 2014; Angrist et al. 2013; Dobbie and Fryer 2011; Hoxby and Murarka 2009). Wider coverage non-experimental evaluations produce more mixed results (Center for Research on Education Outcomes, 2009). On the injection of charter school features to public schools in Houston, and their beneficial effects, see Fryer (2014). 7 See, for example, the Clark (2009) paper on schools becoming devolved from local authority control in the late 1980s and early 1990s or the work on private schools by Green et al. (2012). 8 See, for example, Altonji, Elder and Taber (2005), Neal (1997) or Evans and Schwab (1995) for analysis of US Catholic schools or Hsieh and Urquiola (2006) for an analysis of the private school voucher programme in Chile. For evidence on school effects using international test score data see OECD (2011) and Hanushek and Woessmann, 2011, 2015). 4

8 2. Academy Schools Academies were first introduced to English education in the early 2000s. In hindsight, their introduction can be viewed as a key development in the history of education in England. 9 This is firstly because changes in school type like those that have taken place for academies, and the scale of the academies programme, are rarely seen in education systems across the world. Secondly, the academies programme has been promoted and pursued with almost evangelical fervour by advocates, and run down with an equal lack of enthusiasm and stark criticism by detractors. Lord Adonis (2012) book eloquently describes this. Adonis was the key player in government in setting up the Labour academies programme, and the more sceptical lines from those who oppose academies 10 make the controversial nature of the debate clear. The first clutch of academies opened in the school year beginning in September Academies are independent, non-selective, state-funded schools that fall outside the control of local authorities. In most cases, they are conversions of already existing predecessor schools. Academies are managed by a private team of independent co-sponsors. The sponsors of the academy school delegate the management of the school to a largely self-appointed board of governors with responsibility for employing all academy staff, agreeing levels of pay and conditions of service and deciding on the policies for staffing structure, career development, discipline and performance management. Secondary School Types in England and Academy Introductions There are seven different school types that make up the English secondary education system: independent schools, academy schools, city technology colleges (CTCs), voluntary 9 It is only England, and not in the other nations of the United Kingdom (Northern Ireland, Scotland and Wales) who run their own devolved education systems, where academies have been introduced. 10 For example, the anti-academies alliance (see the website at 5

9 aided schools, foundation schools, voluntary controlled schools and community schools. Each school type is characterised by a unique set of features regarding their autonomy and governance. This is shown in Table 1. In the Table the different school types are ordered by the amount of autonomy that their governing body/management body has, ranging from those with the most (private fee-paying independent schools that operate outside of the state sector) to those with the least (community schools that are largely operated under the remit of local authority control). In the time period we study prior to the Academies Act of 2010 (which altered the definition of academy status in some important ways), the main impetus of the programme was to replace failing schools with academies with aim of generating school improvement by moving away from the conventional school type that had populated the English secondary sector in the past. 11 The path to establish an academy school in a local authority involved a number of steps. The key feature was the need to sign up a sponsor, who worked with the local authority (LA) where the school operates, and to complete a formal expression of interest (this made the case that an academy in the proposed area was both needed and feasible). The phase is completed when the LA and sponsor send the expression of interest to the Secretary of State for Education for his or her ministerial approval. After approval the process moves on to the feasibility stage and beyond that to actual conversion of the already existing school to an academy. Table 2 shows the numbers of state-maintained English secondary schools of each school type in operation at the start and end of the eight year period beginning in the school year 11 There were some other cases, for example where schools that already had more autonomy than a typical state community school became an academy, or as a means for fee-charging independent schools to broaden their intake of pupils by becoming academies (Department for Children, Schools and Families 2007), but as the numbers discussed below will show, these were the exception rather than the norm. 6

10 2001/02. The Table shows that by the 2008/09 school year, there were 133 academies open and operating. These had a gradual introduction, with the first three opening in the 2002/3 school year, and then in the subsequent school years as follows: 2003/04-9; 2004/05-5; 2005/06-10; 2006/07-20; 2007/08-36; 2008/ The Table shows reductions in the other secondary school types as the share of academies rose to a share of 4 percent of the secondary sector by 2008/09. In Table 3, we look in more detail at which types of school converted to academy status. The upper panel of the Table shows information on all schools that became academies, whilst the lower panel shows information on the school conversions on which we have full data available pre- and post-academy conversion. The main differences between the samples in the upper and lower panel is the small number of new academies (twelve of them), for which there is no predecessor school, and the five conversions from independent schools, for which we do not have predecessor school data. Table 3 shows that that (at least) one school from every secondary school type converted to become an academy. However, the majority of conversions occurred in community schools - the typical state school operating with the lowest levels of autonomy as outlined in Table 1. In the period we study, for the seven cohorts of converting academies we have data on 106 schools, and there are two cohorts of schools (comprising a total of 114 schools) that were approved to become academies, but their conversion occurs after the sample period ends in 2008/ Related Literature Whilst there is quite a lot of research on the impact of different school types on pupil enrolment and performance, there is much less that studies what happens when the type of 12 For inclusion in our analysis, the approval of future academies had to have taken place before May 2010, when the government changed and the new coalition introduced the Academies Act. 7

11 school attended by pupils changes. One study related this paper (albeit from an earlier time period, and in a rather different setting) is the analysis of grant-maintained (GM) schools 13 by Clark (2009) in England in the late 1980s and early 1990s. He utilises a regression-discontinuity design that exploits the fact that schools wishing to become GM schools were required to win the support of the parents with children who were enrolled at the school. He finds that the narrow GM vote winners experienced a significant improvement in pupil performance (of 0.25 of a standard deviation) compared to the narrow GM vote losers. Thus the change in school type brought about performance improvements. In the US, the body of work on charter schools is relevant because, at least in some dimensions, charter schools have similarities to academies. Most (although not all) charters are new schools and so in this dimension the relevance is reduced. The more convincing studies in the charter school literature exploit the fact that some schools use lotteries to allocate places when the school is oversubscribed. Examples of this kind include: Abdulkadiroglu et al. (2011), who estimate the impact of charter attendance on student achievement using Boston data; Hoxby and Murarka (2009), which evaluates the effect of charter schools in New York City on their students test scores; and Angrist et al. (2010), who evaluate the impact of a specific Charter School (in Lynn, Massachusetts) that is run by the Knowledge is Power Program (KIPP) and is targeted at low income and minority students. The smaller number of studies of conversions of already existing schools to charters (as in the study of school takeovers in Boston and New Orleans by Abdulkadiroglu et al., 2014), or the introduction of practices used in charters to US public schools (as in Houston schools studied by Fryer, 2014) are of more direct relevance to the English case of academies. Some of 13 GM schools were renamed as foundation schools (see Table 1) in the Schools Act

12 these report substantial improvements in test scores due to the use of methods of best practice. In our analysis, we look at mechanisms in the case of academies and, as we will show, some of these overlap with the successful features of innovation in these in-district charters and school conversions/takeovers. Many of the US experimental and quasi-experimental studies are relatively small scale in that their treatment group is often a small sample of schools (or even a single school in the case of Angrist et al., 2010). Interestingly, they do find positive effects for lotteried in pupils. Abdulkadiroglu et al. (2011) find that the lotteried in pupils experience significant improvements in their English language arts (ELA) scores and math scores at both middle and high schools, with effects being larger for the latter. Hoxby and Murarka (2009) also find that lotteried in pupils experience significant improvements in both their maths scores and reading scores between the third and eighth grade compared to the lotteried out pupils who remain in traditional public schools. Angrist et al. (2010) find that lotteried in students who attend KIPP Academy Lynn, a school that serves students in grades five through to eight, experience significant improvements in their maths scores and ELA scores. In a separate study, Dobbie and Fryer (2011) look at schools in Harlem in New York, with results being broadly similar results to those of Angrist et al. (2010). An issue with the experimental studies is that lotteries only occur in the schools that are oversubscribed. Given that successful schools are more likely to be oversubscribed, estimates that exploit the lottery process are likely to be upper bounds. As an alternative, some studies adopt non-experimental methods to appraise the charter school model. They tend to produce more mixed results. For example, the CREDO (2009) study uses propensity score matching 9

13 methods finding charter school performance to be no better (or worse) than neighbouring traditional public schools. One problem with non-experimental methods is how well they deal with selection bias compared to the lottery based estimates. An informative study that addresses this issue is by Hoxby and Murarka (2007). They estimate treatment effects for charter schools using both nonexperimental methods and lottery based estimates, finding that their non-experimental estimates replicate their lottery-based estimates. Abdulkadiroglu et al. (2011) compare experimental lottery estimates with observational estimates on a large sample of Massachusetts schools, reporting positive urban charter school effects in both cases. However, Dobbie and Fryer (2013) report that observational estimates from New York schools give lower effect sizes than lottery estimates from the same sample of schools suggesting that the use of matching and regression alone may lead to downward bias. On academies themselves, there remains very little rigorous research work. There are early studies of small numbers of converters by Machin and Wilson (2008) and evaluations by Price Waterhouse Coopers (PwC Report 2008), plus various National Audit Office reports. 14 Machin and Wilson (2008) looked at differences in pupil performance in academy schools compared to the performance of a matched group of schools, finding modest, statistically insignificant, relative improvements. The PwC Report (2008) reported higher percentage point increases in the results of academies compared to the national average (which is not a good comparison since academies are well below average performers in their predecessor state). Both 14 See, for example, National Audit Office (2010, 2015) for reports on the Labour academies and the full Labour and Coalition academies programmes respectively. There is also some largely descriptive, non-causal school-level empirical work in the education field. See, for example, Gorard (2014) or West and Bailey (2013). 10

14 Machin and Wilson (2008) and PwC (2008) admitted their studies were in the early days of academy schools, so drawing any firm conclusions from their results is precipitous. A National Audit Office (2010) report on the Labour academies looked at their performance compared to a selected group of maintained schools for academies converting in the 2002/03 to 2007/08 school years and who had been open for at least two years. Their comparison group comprised schools with similar pupil intakes and performance to the pretreatment academies. They report a significant improvement in pupil performance in the academies compared to the comparison group, arguing the result to be driven by more advantaged pupils attending the academy post-conversion. In our analysis reported on below we separately study intake and performance for this very reason, because we observe changes in the ability composition of pupils in terms of their prior academic achievement entering schools after they become academies. Thus we implement a research design studying performance effects only for children who were enrolled in the converting schools before they became academies (in the terminology of Abdulkadiroglu et al. (2014), who study school takeovers in New Orleans, these are grand-fathered pupils). Since the initial enrolment decision was made for the pre-conversion school, academy conversion should be exogenous to these students, and therefore the study of pupil performance effects can be set up as in terms of an intention to treat empirical exercise, from which we can obtain a causal estimate of a local average treatment effect. 11

15 3. Data and Research Designs Data Our main source data source is the National Pupil Database (NPD). 15 The NPD is centrally collected census data containing pupil and school characteristics combined with the annual National Curriculum key stage attainment data at the pupil level. The Pupil Level Annual Census data (PLASC) contains information on characteristics of all pupils in the English maintained sector. This has been collected three times per year (January, May and September) from the 2001/02 school year onwards (though pupils can be traced back to earlier years of the key stage attainment data via their unique id). For this paper, we only use the year-on-year January collection because this collection is the most available and consistent over time. 16 In England, compulsory education is organised around four key stages for years of schooling from ages 5 to 16. These are key stage 1 (in years 1 and 2) and key stage 2 (years 3 to 6) in primary school; and key stage 3 (years 7 to 9) and key stage 4 (years 10 and 11) in secondary school. In studying academy conversion impacts, our two outcomes of interest are pupil intake and pupil performance. To study intake for pupils enrolling in secondary school in year 7, the first year of secondary school, we look at the key stage test scores (KS2) that pupils take at the end of primary school (aged 10/11 at the end of year 6) before they make the transition to secondary school. To study performance in year 11, the final year of compulsory secondary schooling, we look at the key stage 4 (KS4) examinations that pupils take at the end 15 The use of pupil-level data throughout and refined research design are the key innovations compared to the earlier version of this paper (Machin and Vernoit, 2011). Of course, use of pupil-level data (which the earlier version did not have full access to) makes the analysis more appropriate in that the right level of treatment is the effect of schools on the pupils that attend them compared to schools they would otherwise have attended. Put another way, changing pupil composition due to academy conversion because the demand for places alters compared to the predecessor school can render school-level estimates biased. 16 See the Data Appendix for a detailed description of the sample constructions we use. 12

16 of compulsory schooling (aged 15/16 at the end of year 11). These school leaving exams are known as GCSEs (standing for the General Certificate of Secondary Education). The impact of academy conversion needs to be analysed at the pupil-level. This is because the underlying composition of students attending schools may change over time (as we show, pupil intake does change post-conversion). To study intake, we match each pupil entering year 7 of a secondary school over the 2001/02 to 2008/09 academic years to their KS2 results over the 2000/01 to 2007/08 academic years. It is important to note that we allow for this intake change when identifying the causal effect of academy attendance on KS4 performance by focusing on pupils already enrolled in an academy pre-conversion thus avoiding endogeneity of the post-conversion enrolment decision. One further practical issue concerns the definition of schools that convert to academies. There are a small number of examples where more than one predecessor school combines to create one academy school. Where this occurs, we create one hypothetical pre-academy school (see the discussion in the Data Appendix). This adopts hypothetical characteristics that are a weighted-average of the characteristics of the merged schools. Modelling Approach A conversion event c is defined as occurring in the school year t that the academy school starts operating (i.e. event year E(t = c) is when it opens for business and admits new pupils as an academy). We then use the academic year that the academy status is awarded (and the years after) as the base that we need to calculate the quasi-experimental before/after conversion effect on the pupil-level outcomes of interest. We have two outcomes of interest. The first is to study the impact of academy school conversion on the quality of pupil intake, which we measure in terms of ability composition by 13

17 the end of primary school standardised KS2 average points score 17 of pupils who enrol into year 7, the first year of secondary school. The second outcome, and the main outcome of interest in the paper, is the KS4 performance of pupils, measured as the standardised best 8 exams points score of individual year 11 students. We also consider robustness of the findings to different measures (the precise measures used for KS2 and KS4 are described in detail in the Data Appendix, together with additional performance results for a range of different KS4 measures). Research Design Quality of Pupil Intake We begin by comparing what happens to pupil intake (measured by KS2 test scores of year 7 enrollers) before and after conversion for pupils attending schools that do and do not convert in the sample period. In the following equation for pupil i enrolled in year 7 in school s in year t, the key parameter of interest is the differences-in-differences coefficient δ: J KS2 = α + α + δa *I(E t = c) + λ X + u ist s t ist 1j jist 1ist j = 1 (1) In (1) A is a dummy variable equal to 1 if the secondary school attended in the entry year of secondary school is in the treatment group (i.e. will become or is an academy in the sample period) and equals 0 if the school is in the comparison group (schools that do not convert to an academy in the sample period, but convert after the sample period ends). Defining E as an event year, the dummy variable indicator I(E t = c) takes a value 1 if the pupil enrols in conversion year c or after and X denotes a set of control variables. Finally, α s denotes school fixed effects, α t denotes year effects and u 1 is an error term. 17 This is calculated by totalling (for each pupil) their raw scores in English, Maths and Science. We then average across the three before standardising to have mean zero and standard deviation one. 14

18 The specification in (1) imposes an average post-conversion effect across all postconversion years. A more flexible specification estimates separate treatment effects for pre- and post-conversion years, in an event study setting, as: e=c+3 J KS2 = α + α + δ A *I(E=e) + λ X + u ist s t e ist 2j jist 2ist (2) e=c-4 j=1 We report event study estimates of four pre-conversion δ s (from E = c-4 to c-1) and four conversion year and post-conversion δ s (from E = c to c+3). We also allow for heterogeneous effects by recognising that academies with different forms of predecessor school gain different amounts of autonomy when they convert. We consider differences by 'autonomy distance' by allowing effects to vary with the type of predecessor school. To do so, we estimate separate versions of (2) for academy conversions from community schools and conversions from non-community schools. 18 The presumption underpinning this is that the autonomy distance is largest for conversions that take place from predecessor community schools (see the earlier discussion around Table 3). Research Design - Pupil Performance To study pupil performance effects we look at the Key Stage 4 (KS4) performance of year 11 students. There are important identification issues that need to be considered here that did not apply to the KS2 intake part of our study. Specifically, there are three important dimensions of our empirical strategy that enable us to identify a causal effect of academy conversion on pupil performance: i) We consider children whose parents made their decision to enrol their children in the academy before it converted. This ensures that academy conversion was exogenous to enrolment in secondary school. 18 We limit the control group to community/non-community predecessor schools only in the respective regressions. 15

19 ii) We limit the event study on pupil performance to a maximum of four years post conversion, including the year of conversion itself. This is because children spend five years in secondary school. Thus children affected by conversion when enrolled in the predecessor school in their first year of secondary school, year 7, could have up to four post-conversion years of education in the academy (i.e. since their full enrolment in the school runs from E = c-1 up to E = c+3). Similarly children affected by conversion when enrolled in the predecessor school in year 8 could have up to three conversion years (to E = c+2), and so on for children in years 9 and 10 in the predecessor school. Thus the length of treatment varies depending on when conversion took place. Table A1 of the Data Appendix shows the structure of this treatment in more detail. iii) Since the initial enrolment decision was made for the pre-conversion school, academy conversion should be exogenous to these students, and can be set up as in terms of an intention to treat (ITT) empirical exercise, from which we can obtain a causal estimate of a local average treatment effect (LATE). The ITT group is all pupils enrolled in the predecessor school who pre-conversion are lined up to take their year 11 KS4 exams in the school (i.e. year 7 students enrolled 4 years prior to conversion, year 8 students enrolled 3 years prior etc). The approach is similar to that taken in Abdulkadiroglu et al. (2014), who study school takeovers in New Orleans, referring to pupils who stay in a converting school as grand-fathered pupils. As we are interested in the causal impact of academy conversion on KS4 results we can first operationalise our empirical analysis by means of the following value added equation: J KS4 = α + α + θ1a *I(E t = c) + π X + φ1ks2 + v ist s t ist 1j jist ist 1ist (3) j=1 In (3) estimates of the θ 1 coefficient is analogous to the KS2 difference-in-difference set up above, but because we now restrict to pupils enrolled in the pre-conversion school there is a 16

20 subtle difference. This is that not all pupils who end up taking their KS4 exam at a school that becomes an academy (A ist = 1) were enrolled in the school pre-conversion. Conversely, not all students initially enrolled in a school that converted to an academy (ITT ist = 1) remain in the school to take their KS4 exams. Thus, ordinary least squares estimates of θ 1 from (3) will not reflect a causal estimate. Defining the variable indicating treatment by an academy conversion as Z = A *I(E t = c) we account for selection into and out of treatment by using intention to ist ist treat status (ITT ist ) as an instrument for Z ist, to estimate a LATE as follows: J Z = α + α + θ2itt *I(E t = c) + π X + φ2ks2 + v ist s t ist 2j jist ist 2ist (4) j=1 J KS4 = α + α + θ3itt *I(E t = c) + π X + φ3ks2 + v ist s t ist 3j jist ist 3ist (5) j=1 In the first stage in (4) the estimates of θ 2 show the proportion of the ITT group that stay in the academy and take KS4 exams there. These are the grandfathered pupils that remain in the school. Equation (5) is the reduced form regression of KS4 results on the instrument. The instrumental variable (IV) estimate is the ratio of the reduced form coefficient to the first stage coefficient, θ 3 /θ 2. Extending this IV setting to the event study framework we are able to estimate separate estimates for the four years from conversion onwards (E = c to c+3) using four instruments for whether a pupil is ITT for event year c, event year c+1 and so on. 19 Further extending to 19 Formally, an individual enrolled in a treatment school in event year c-i and academic year group k is, for instance, intention to treat for c+1 if c-i + (11-k) is equal to c+1, where 11 is the academic year group in which KS4 exams are sat. The binary instrument in equation (4) is equal to 1 only if any one of the four instruments used for the event study equals 1. 17

21 estimate separately for community and non-community predecessor schools enables us to consider the impacts of autonomy distance associated with the conversion. Comparison Schools In Table 4, we compare average pre-treatment characteristics of academy schools and other types of maintained English secondary schools. It confirms that academies have significantly different characteristics from the other school types. This is true of pupil characteristics (like the proportion eligible for free school meals, the proportion white and the proportion with special educational needs) and of pupil performance (like the headline school leaving age measure of the proportion getting 5 or more A*-C GCSEs and equivalents and the Key Stage 2 primary school points score). This is not at all surprising. The whole point of Labour s academy programme was to improve poorly performing schools. Thus, a naive comparison between academy schools and all other state-maintained schools is likely to suffer from significant selection bias. A related problem is that schools that go on to become academies may have common unobservable characteristics (e.g. they have a type of school ethos that is more in line with the academy model). Finally there is scope for mean reversion, as academies were badly performing schools in their predecessor state. Looking in more detail within the group of academies it does, however, turn out that the schools that convert to academy status between 2002/03 and 2008/09 have very similar pretreatment characteristics to the schools that later become academies. A set of balancing tests is given in the final row of the Table. One cannot reject the null hypothesis that the 106 academies that convert in the sample period and the 114 future academies have the same sets of characteristics. This partially legitimises our use of pupils attending future converters as a 18

22 control group in the D-i-D setting. It is further legitimised in the empirical findings we describe below where there are no differential pre-conversion trends in the same school years, thus allaying any concerns of mean reversion. Thus the data structure we use is a balanced panel of schools for the school years 2000/01 to 2008/09 with repeated cross-sections of enrolled year 7 (for intake) and year 11 (for performance) pupils. Time variation in the academy conversion programme means that we can set these up in the event study framework detailed above. Table A2 of the Data Appendix shows the sample sizes for the different cohorts of academy schools in the KS2 and KS4 analyses that we undertake. 4. Empirical Results Academies and Pupil Intake In Table 5, we report results showing the effects of academy school conversion on the quality of pupil intake. The Table reports estimates from five different empirical specifications. We begin with the raw differences-in-differences estimate in column (1). We add time-varying controls in column (2). In column (3), we estimate heterogeneous effects in the event study setting, and in columns (4) and (5) we look at event study estimates for pupils in community and noncommunity predecessor schools respectively. The estimated coefficients in the Table show that academies, post-conversion, attract pupils with significantly higher KS2 test scores than those schools that convert after our sample ends. Column (1) shows that, on average, pupils enrolling in an academy at year 7 have a KS2 mean points score that is of a standard deviation (σ) higher than those attending schools 19

23 yet to attain academy status. The average intake effect falls to 0.058σ with the addition of the controls in column (2). The event study estimates in column (3) show there to be no pre-conversion differences in trends between pupils in the treatment and control schools. They show a conversion year impact (E = c) of 0.010σ. This gradually rises year on year post conversion, becoming strongly significant in statistical terms, before reaching 0.082σ by event year c+3. These results suggest that (on average) there was a change in the pupil intake of schools when they converted to academy status. On conversion, academies began admitting higher ability pupils. As shown in Figure 1, this positive impact grows over time, suggesting important compositional changes in the academies student body over time. Interestingly, the positive intake effects are only present for academies that convert from community predecessor schools (as shown in column (4)) where the (bigger) conversion year impact of 0.056σ is significant and rises to σ by E = c+3. Figure 2 plots the event study estimates by predecessor type and the clear difference is evident. Academies and Pupil Performance Table 6 shows OLS, ITT and IV estimates of the impact of academy conversion on Key Stage 4 pupil performance for year 11 children. Columns (1) to (3) show estimates of the impact of academy conversion on end of secondary school KS4 pupil performance from specifications without control variables. Columns (4) to (6) show estimates from value added specifications that net out end of primary school KS2 pupil performance and include controls while columns (7) to (9) extend the (4) to (6) specifications to the event study setting. The first point to note is that the estimates are broadly similar regardless of estimation method. The columns (1) to (3) specifications show that being in an academy school increases 20

24 pupil s KS4 standardised test scores by a statistically significant 0.082σ to 0.095σ. Adding the prior achievement measure (KS2) and control variables in columns (4) to (6) reduces this a little to 0.073σ to 0.080σ, which remains significant. Thus pupil achievement is significantly higher on average, and so is value added for pupils attending schools that converted to an academy. The interpretation of the ITT estimate in column (5) of a significant 0.073σ improvement is that KS4 went up by 0.073σ more for children enrolled in a pre-conversion school as compared to children enrolled in control schools in the same school years. The IV estimate in column (6) corrects for the fact that not all ITT children sat their KS4 examinations in the school (in fact 93.2 percent did as the highly significant first stage at the bottom of the Table shows) and this rises to 0.079σ. This is the preferred baseline average impact estimate of academy conversion. Columns (7)-(9) of Table 6 show the event study D-i-D estimates. These show no discernible pre-treatment trends, but a significant positive, and rising over time, impact after conversion. In the IV estimates of column (9), conversion year test scores are 0.037σ higher (though statistically insignificant), and this rises to (a statistically significant) 0.184σ four years post-conversion. Figure 3 very clearly shows the significant upturn after treatment and the lack of pre-conversion differences. It also makes it clear that academy conversion raised pupil performance, according to the causal IV estimates. In Table 7 and Figure 4 we show separate IV estimates for pupils attending academies that converted from community and non-community schools respectively. Significant and sizable effects are seen for the former, whilst there is no improvement for the latter. These results reveal an important finding in terms of the overall interpretation of our results. They suggest that pupils attending schools experiencing the largest increase in autonomy via 21

25 conversion those from predecessor community schools were the only ones to experience performance improvements. The estimated effects are large, for example with a year of conversion effect in the IV estimates being 0.097σ that reaches 0.388σ by c+3. Conversions from community schools enabled a gain of responsibility for the majority of the curriculum of the school (except the core subjects: English, Maths, Science and IT); the structure and length of the school day; the school budget and all staffing decisions. In the next section of the paper we look at which of these underlying mechanisms may have been behind the observed performance improvements. Prior to that, however, we consider some empirical extensions and study the robustness of the key findings. Extensions and Robustness Recall that the treatment effect we are estimating is time-varying because academy conversions occur in different school years 2002/03 through 2008/09. Thus one extension we have considered is to estimate the most detailed KS4 models separately by cohort. Figure 5 plots IV estimates from the models separately by cohort. 20 It is very clear that a null hypothesis of the same average effects across cohorts is not rejected by the data. The gradually rising positive performance effects are seen across the four cohorts of conversions shown in the Figure. The event study estimates uncover a significant improvement in performance that grows with more years post-conversion. This is not quite the same, though is strongly connected, to the years of exposure to academy treatment that children receive. The reason why is that a small number of pupils do not sit their KS4 exams in an academy school and are not intention to treat, 20 It shows the equivalent to the Table 6 column (3) specification separately estimated for four year cohorts of conversions: these comprise the 10 conversions in school years 2002/03 and 20030/4 (3 from 2002/03 and 7 from 2003/04), the 12 conversions from school years 20040/5 and 2005/06 (2 from 2004/05 and 10 from 2005/06), the 45 conversions from 2006/07 and 2007/08 (15 from 2006/07 and 30 from 2007/08) and the 39 conversions from school year 2008/09. In each case they are compared to the control group of 114 schools that convert after the study sample period ends. 22

26 but are nevertheless exposed to treatment (i.e. they may enter post-conversion and leave prior to examinations). We have therefore reformulated the estimated models in terms of years of exposure to being taught in an academy. This involves defining the ITT variable and the treatment variable as years of exposure. Table 8 shows the results both for continuous and for dummy variable ITT and treatment years of exposure variables. It is evident that more years of exposure produces a bigger impact on pupil performance, and one that is of sizable magnitude for four years of exposure at 0.323σ in the academy conversions from predecessor community schools. Next we consider a falsification test. This is a test of whether the estimated θ coefficients reflect pre-existing differences in the outcomes of interest for our treatment group compared to our control group. To do the falsification exercise, we altered the year in which each cohort of academy school became an academy to that of an earlier time period. We then re-estimated our models calculating the θ coefficients based on a fake year (four years before) where we pretended schools converted to academies. If the θ coefficients in this falsification exercise give similar results to that of our original specification, then we would worry that the results of our original specifications reflect pre-existing differences in the outcomes of interest. To avoid any contamination when pupils attend schools that actually have converted, as oppose to attending during the fake conversion, it is necessary for there to be no overlap, at the school level, between fake post-academy years and actual post-academy years. This means that we have to shorten the post-treatment fake periods for the first three academy cohorts. Thus the sample size 23

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